Technical Update for Oil: Brent and WTI

Highlights: Brent Crude

  • Brent has been progressing upwards in an ascending trend channel for a number of months
  • Last week it broke down sharply from a tight symmetrical triangle or pennant pattern and through support of the 50-day exponential moving average (ema) before finding support around the 50-week ema and the 200-day ema. The low for the week was 51.18.
  • Brent is now likely to either:
    • bounce from here back up towards the breakdown level around 55.00 to test it as resistance, before turning back down, or
    • relatively quickly continue the descent to lower support levels
  • Further weakness is likely to eventually see Brent hit at least the lower channel line, which looks to be around 47.60 at this point.
  • If it continues to progress within the channel then another touch of the upper line is possible eventually once the current correction is complete.
  • At this point resistance of the upper line looks like it would be around the 200-week ema (now at 65.92).

annotated-BRENT CRUDE_1week_Mar12_2017-v1

annotated_BRENT CRUDE_1Day_Mar12_2017-v1

Highlights: WTI Crude

  • WTI has formed a potentially bearish ascending wedge over recent months
  • Last week it broke down sharply from a tight short-term consolidation pattern formed around resistance of the wedge, and dropped below support of the 50-day ema.
  • Support so far is at the low for the week of 48.36. That’s just below both the 50-week ema and the 200-day ema but still close enough where the area of last week’s low may hold and lead to a bounce.
  • Brent is now likely to either:
    • bounce from here back up towards the breakdown level around 52.25 to test it as resistance, before turning back down, or
    • relatively quickly continue the descent
  • Further weakness is likely to eventually see WTI hit at least the lower trend line of the ascending wedge. At this point it looks like that would occur around the 45.90 price area.
  • If WTI continues to progress within the wedge then another touch of the upper line is possible once the current correction is complete.
  • Given the current structure of the wedge it looks like there could be more time needed for the wedge to fully form before it breaks down, if it is to do so. This is supportive of another move higher eventually.
  • As with Brent, it looks like the 200-day ema will be close to the upper wedge line by the time WTI gets there.

annotated_WTI CRUDE_1Day_Mar12_2017-v1 annotated_WTI CRUDE_1week_Mar12_2017-v1

Note: Keep in mind that price/chart patterns can and do fail, and they can also evolve into different patterns.

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Bruce Powers, CMT
About the Author
Bruce Powers, CMT, has over 20 years experience in the financial markets. Previously, he was President at WideVision, a Dubai based FinTech and IT services company, which published MarketsToday.net/en/, and where he also was Chief Technical Analyst. For the past eight years Bruce has written a weekly column on the UAE stock markets titled \'On the Line\' for the Gulf News newspaper, and has appeared numerous times as a guest on TV business shows. Bruce is a Chartered Market Technician (CMT) and until recently served as Co-Chair of the CMT Association Dubai chapter, which he Co-founded.

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